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Thursday, 8 May 2014

Thinking of joining Costco? Here are 5 reasons you may NOT want to

There are many benefits to becoming a Costco member however before you go in and sign up here are 5 reasons that Costco may not be the right option for you:

1. You live on your own or in a small household

The real benefits from Costco come from the ability to save money by buying goods in bulk. If you live in a small household the number of things which you benefit from buying in bulk is significantly limited. Can you really get through 5kg of hot dogs on your own? What about that 3L bottle of sauce? Sure you can find ways around this by freezing, pouring into smaller bottles or a variety of solutions but is it really worth it for a 10% saving?...Maybe not.

If you are considering joining Costco and are comparing the prices to what you currently pay it is probably worth looking at the prices of bigger bulk packs in your supermarket before you join. You may find that you can save money that way...without having to pay the $60 membership fee per year.

2. You don't have a lot of storage space

I made this particular error and learned from my mistake very quickly. I went with my Dad to Costco, on his card and thought I could stock some non perishable things up in bulk for when I needed them. I live in a smaller two bedroom apartment and even with the second room free, finding place to store 72 rolls of toilet paper (the smallest package there) was a real challenge.

If storage space is an issue for you, it doesn't matter how many people are you are shopping for, Costco's bulk goods are going to create more headaches for you than you have possibly though of. Take one trip to Costco on a friend's card and see whether you can actually store some of the things that you can save money on.

3. You don't really know or check the price of goods when you shop

Do not make the mistake of assuming that Costco is always the cheapest option for everything. It really isn't and if you do not know your prices when you go in you can end up paying far more than you should for many items.

For example, I know the prices of D-SLR cameras because I helped a friend buy one recently. The next time I went to Costco, the same camera was advertised for $400 more than my friend had paid at a regular Australian retailer (who are definitely not known for being price leaders on anything).

There are some things you can get very cheap and there are some things you'll probably end up paying more on. Being able to tell the difference and being aware of prices is probably the most important skill you can have when you go to Costco. If you don't really know your prices or you aren't the regular shopper for your household then being a member of Costco probably is not the best option for you.

4. You live particularly far away from Costco

People only really look at the savings on the goods that they are buying. They often to factor in other costs such as fuel costs, tolls (if relevant) and more importantly the time it costs you to get to Costco. Most of us are reasonably busy and wish that we had more time in the day to do things we actually enjoy doing. Would you pay $10 or $15 to free up an extra hour of the day to do something you like?

If it takes you an hour to get to Costco, and an hour to get home again that's $30 straight away. Add another $5 - $10 for fuel and whatever your tolls are and you are having to save an awful lot at Costco just to break even. And this isn't counting the $60 membership fee you're paying each year.

If you live particularly far away from Costco, it may actually work out cheaper for you to visit your local supermarket.

5. You like to plan in advance exactly what you are going to buy

The best thing about most supermarkets are the flyers they send out each week with their listed prices. You can plan your shopping trips around where the specials and sales are for the week and if you are not the type that likes to browse or to work it out as you go then this is particularly valuable. Costco does not publish it's prices either through flyers or online (in Australia) and it makes it impossible to know whether you are going to get a good deal on what you need to buy (this is related to point 3 above).

Have you ever noticed that if you go shopping not knowing what you really need you always end up spending more? It's not that you don't use those things that you end up buying...but did you really need every single one of those items. If your objective is to save money when going to Costco then perhaps you need to consider this issue before you join.

Make sure you think through the decision to join Costco before you pay for your membership

From the article above you may assume that I am a Costco hater...but I'm really not. I think it's incredibly valuable for a certain part of the community who have a particularly large grocery expenditure bill and who are on top of the prices of various goods so they know when they are getting a good deal. I do not fall within these categories and when I went I found that the things that I actually needed were far too big / bulky and that I ended up spending a lot on things I did not really want nor need.

Do you shop at Costco? Are you happy you joined or do you regret not having tried it out beforehand?